KUALA LUMPUR, July 2 — Malaysia’s five-year bonds rose, driving the yield to a six-week low, as global funds raised holdings of the nation’s debt amid a rally in the ringgit.
Overseas investors purchased RM10.2 billion (US$3.2 billion) of sovereign notes in May, taking total ownership to RM150.2 billion, the highest level in Bloomberg data going back to 2006. That followed a RM4.5 billion drop in April, the biggest since July 2013. The currency is gaining on speculation the central bank will increase interest rates this month for the first time since 2011.
“The rally in Malaysian government bonds has been driven by the fact that offshore has been covering their underweight positions,” said Kumar Rachapudi, a Singapore-based strategist at Australia & New Zealand Banking Group Ltd. “This is also being helped by the rally in the currency, which enhances the returns for bond holders.”
The yield on the government’s 3.654 per cent notes due October 2019 fell two basis points to 3.69 per cent as of 11:44am in Kuala Lumpur, the lowest level since May 16, data compiled by Bloomberg show. It’s dropped seven basis points, or 0.07 percentage point, in five days.
The ringgit was little changed today at 3.2060 per dollar, according to data compiled by Bloomberg. The currency advanced 1.7 per cent in the second quarter, the best performance since September 2012. The next rate decision is due on July 10.
Overseas investors’ total holdings of Malaysian debt, including government and corporate notes, climbed 5.7 per cent in May to a record RM249.5 billion from a month earlier, the latest central bank data issued this week shows.
The government’s 10-year notes climbed for a sixth day. The yield on the 4.181 per cent debt maturing July 2024 dropped one basis point to 4.02 per cent, the lowest since May 15. — Bloomberg
